Building a Better Healthcare Board

Though not speaking specifically about the Elmhurst board, that lack of specialization could be a problem for any community hospital, says Carol Geffner, PhD, president of Newpoint Healthcare Advisors, whose area of expertise is board governance strategy and change.

"One of the things I've seen firsthand is board members who do not understand, in depth, the linkages between transformation, culture, and physician alignment to performance and hospital reimbursement," Geffner says. That can show up in different ways. But having that expertise is critical because executive leaders will be expected to execute the strategy the board articulates. "Issues such as transformation and culture are now business issues, whereas in the past they might have been viewed as soft. Today they are directly tied to performance and reimbursement," she says.

Atchison, for one, seems to understand that. Whether the board has those capabilities or can attract them is less certain.

"As we move forward with consolidations in healthcare, we'll end up with multibillion dollar–revenue organizations," he says. "Those will seek to attract a higher caliber of trustees, if you will, that reflect a number of different skill sets or may not be in the service areas of the hospitals that they operate."

Elmhurst's board is not standing still on that front. It's created a governance committee to review its current structure and has engaged an expert to advise directors on how to integrate those skills into the board. Some of the ideas were implemented and others were deferred, but the whole process started with an education on best practices "and how we lined up against those, and then we started a work plan to, over time, implement them," Atchison says.

He says Elmhurst's board is deficient in several areas, but good to very good in others. For example, for reasons of history, he says, there are no limitations on tenure. Rather than implement term limits, as many other systems do, Elmhurst does an in-depth assessment each year of all the trustees.

Atchison says locating the high-level skill sets Elmhurst may need is not easy, even drawing from Chicago, the nation's third-largest city, which presumably would have experts geographically close by who could serve on the board.

"Very few nonprofit organizations have a specific plan to recruit specialists in certain areas," Atchison says. "They may be lucky in finding a great HR person in corporate America who lives in the community, for example, but I think that's the next step for community hospitals—to put in place a recruitment process and work plan that attempts to do that."

Technology and social media also are becoming important in governance, says Newpoint's Geffner. "Because of the trend and need for transparency, social media also now plays a major role relative to a hospital's public reputation, community impact, and brand. At the governance level in the post-reform environment, it is helpful for boards to factor in the impact of social media on strategic decision-making."

Goldsmith, of John Muir Health, identifies managed care expertise as one skill set that is on his board's recruitment matrix, and they are trying to fill that gap because he says that expertise might be the biggest deficiency for community hospitals accustomed to the fee-for-service world.

"Historically a relatively small percentage of patients have been at risk. But as we look to 2020, the majority of patients might be at risk," he says. "That turns everything 180 degrees from what we and other hospitals have been doing for 40 years."

Similarly, fresh ideas are needed. Goldsmith says his board, for example, would consider bringing in as a board member what he calls a "No. 2 or No. 3 individual" in a noncompetitive health system in a separate geographical area.

"I know of a number of nonprofits that have done that or are in the process of doing it," he says. "We have not, but I think it would give us some additional viewpoints—a pretty exciting win-win."

Mackie, of North Carolina's CaroMont Health, says his board and CEO identified a need for expertise on quality.

"As we were moving into quality, we wanted more of a scientific background," he says, so they recruited Sheila Reilly, PhD, a professor of biology at local liberal arts college Belmont Abbey. "She brought to the board a higher level of scientific background."

Focusing on strategy
Especially during this time of transition, boards should make sure they're focusing on strategy, not operations, says Goldsmith. That advice should be obvious, he says, but only relatively recently has his board really embraced that role.

"Historically, a lot of board meetings were taken up with committee reports and repetition of what's in the board package distributed before the meeting," he says. "But now we operate under the assumption they've read all that."